March Madness & Investing: Bad Coaching Eventually Gets Exposed

by: Brendan Magee

It seems like 10 years ago that March Madness began. Yet a few weeks and 60 teams later, we are down to the Final Four. Thanks to Villanova those of us in the Delaware Valley get to enjoy one of our teams finally playing a meaningful game. 

One of the things that I like about college basketball is that it is a coaches league, meaning that the coach is in control of just about everything. They recruit the players they want. They decide what offensive and defensive strategy the team will implement. They decide on how and when the team will practice. There is nothing that is not within their control. As such the coach bears the majority of the  responsibility for the teams success or failure. 

Good coaching is reflected in not only how the team plays, but also how it conducts itself during good times and bad. How a team behaves during the most difficult times of a game goes back to how the team is coached from the first day of the season. During a long hard season with its ups and downs players and a team's program will get tested. Do the players place the importance on the team's success or their own individual success? Do the players take as much personal responsibility for the team's success as they do the team's failures? Does the team members take it upon themselves to do the extra work needed to achieve success?

The two pictures above show what happens to teams who receive good and bad coaching. Villanova has played tough, gritty, team ball and made it to the Final Four. Baylor, not only lost to Yale in the first round of the tournament, but also during the game embarrassed itself and the university by fighting amongst themselves on live television. Villanova's coach, Jay Wright, is always talking about playing basketball the Villanova Way. He describes it as a family that sticks together, plays good solid defense, hustles, and puts the team first. I don't think anyone who watched Baylor play would associate those words with Baylor Basketball.

Investing is very much similiar to college basketball. Like the players, investors have big dreams. As opposed to playing in the NBA, investors want to educate their children, retire with enough money to do the things they have always dreamed of, enjoy financial security, and perhaps create some opportunities for their children. None of those goals are achieved overnight. They take time and hard work. Along the way there will be highs and lows. There will also be distractions that have to be dealt with.

Studies show that investors over the past thirty years have received returns that less than half of what the stock market has generated in returns. It also has shown that the shortfall has more to do with investor behavior than anything else. So perhaps investors should employ not so much an adviser, but rather a coach. Advisers typically advise about the products people should be investing in where as a coach helps to make sure the investor's behavior is consistent with producing the results they are after, and that is the hard part. Coaches also, and maybe most importantly, take personal responsibility for the results that are achieved.

During the summer time when we are at the shore or on the golf course, those college basketball players are training, running, lifting weights, and doing all the little things that go into competing at such a high level. Most of it is hard back breaking work, not stuff you jump out of bed and can't wait to get at. Coaches make sure and verify that the work is getting done. 

Investing when it is done properly isn't very exciting. You are sitting around for a long time waiting to reap the benefits of your labor. For the longest time it can seem as nothing is happening, that you are not making any progress at all. You'll hear one opinion after another telling you that your strategy is wrong and if you don't change, you are going to be left in the dust. You will endure stock market crashes, bull markets that you, apparently, are not participating, plus one investing fad after another telling you that the world of investing has changed and you need to get with it. 

What will gets investors and basketball teams through it all so that you can look back with pride on all that you accomplished is coaching. Without it, investors and basketball players wind up fighting against themselves.

Go Nova!

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions and comments e-mail brendan@coachgee.com or call 610-446-4322